8 ms·

If Google is willing to pay 200k above market rate to hire an employee from a competitor, chances are part of the "value" of that employee is that they will no

If Google is willing to pay 200k above market rate to hire an employee from a competitor, chances are part of the "value" of that employee is that they will no longer be working for someone else. Yes, literally speaking, it's "worth it" to Google, or they wouldn't do it. Being so large, Google can throw advertising money on their self-driving car division, no problem. They can take a loss for 5-10 years, no problem. However, it's extremely anti-competitive, which is the problem others are pointing out here.

FartyMcFarter 6y ago
> If Google is willing to pay 200k above market rate This is not possible according to the usual definition of "market rate". If Google is willing to pay X, that is the market rate.
- benrbray 6y ago
  I disagree with your definition of "market rate", but let's suppose you're right: Do you not see it as a problem that Google alone decides the cost of entry to an entire market?
  - FartyMcFarter 6y ago
    Why do you think that Google alone can afford to hire software engineers? edit - I see how my post was misleading. I should have said X is a "lower bound" for the market rate.
    - benrbray 6y ago
      Do you mean upper bound?
  - whatshisface 6y ago
    Google isn't the only well-paying software company. If they were, they wouldn't throw money away by paying so much in the absence of competition. Furthermore, there's nothing stopping you from paying $100,000/hour and beating Google if you wanted to. If your business can't make good enough use of programmers to justify paying more than Google, then maybe their talents would be best allocated where they would be most valuable.
  - msla 6y ago
    > Do you not see it as a problem that Google alone decides the cost of entry to an entire market? This puts Google in the position of being a monopsony for the labor of programmers; that is, they're the only or primary buyer of that commodity. Part of antitrust laws is preventing that, so, yes, there is a problem if a monopsony arises, but Google isn't in that position anyway because jobs aren't completely interchangeable the same way programmers aren't completely interchangeable. For example, companies can compete on the basis of not being Google, which attracts some people. Companies can compete on the basis of being based in some other geographic location, or having other things to work on, or having a different mix of salary and benefits. Google offering the highest salary doesn't mean they automatically get everyone. It means they get people who want the highest salary to do what Google's interested in as opposed to wanting to work on some kinds of technology Google isn't pursuing.
- mh8h 6y ago
  That's assuming that the thing Google is buying is a commodity, and its value is the same to all parties.
- Spooky23 6y ago
  The law defines practices that, while they happen in a marketplace, are anti-competitive and thus problematic. It is not anti-competitive to own the gas station next to the airport and charge a premium for gas. It is anti-competitive to buy out surrounding gas stations and close them to extract higher prices, or to conspire with competing stations to coordinate pricing. Single-firm anticompetitive behavior, as defined by FTC: (https://www.ftc.gov/enforcement/anticompetitive-practices https://www.ftc.gov/enforcement/anticompetitive-practices) Single Firm Conduct: "It is unlawful for a company to monopolize or attempt to monopolize trade, meaning a firm with market power cannot act to maintain or acquire a dominant position by excluding competitors or preventing new entry. It is important to note that it is not illegal for a company to have a monopoly, to charge “high prices,” or to try to achieve a monopoly position by aggressive methods. A company violates the law only if it tries to maintain or acquire a monopoly through unreasonable methods." Horizontal Conduct: "It is illegal for businesses to act together in ways that can limit competition, lead to higher prices, or hinder other businesses from entering the market. The FTC challenges unreasonable horizontal restraints of trade. Such agreements may be considered unreasonable when competitors interact to such a degree that they are no longer acting independently, or when collaborating gives competitors the ability to wield market power together. Certain acts are considered so harmful to competition that they are almost always illegal. These include arrangements to fix prices, divide markets, or rig bids."
  - cptskippy 6y ago
    That's in relation to creating artificial scarcity of a product or controlling supply. Staff aren't a product or commodity.
    - Spooky23 6y ago
      Labor certainly is a commodity. I have a relative who bought a very nice beach house from his legal fees suing a hospital network for doing something similar.
whatshisface 6y ago
If Google is willing to pay $200k over your current employer for you, your employer is paying you $200k under your market rate.
- mhaberl 6y ago
  You can view this issue from another standpoint. Imagine some market where 10 companies sell bread and it costs $5. And lets assume that the costs are $4 and $1 is profit. Then comes a company that makes its money on selling water and it is doing very well. It comes to a bread market and starts selling bread for $3. The competition is quickly destroyed and the bread prices rise. Edit: as a sibling comment mentioned: https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing
  - whatshisface 6y ago
    Google buys labor using the proceeds from the stuff they assign the labor to do. Their money does not come from a second market unrelated to programmers. Even if you flipped buyers and sellers your analogy would be inapplicable.
    - a1369209993 6y ago
      > Their money does not come from a second market unrelated to [those] programmers. Yes it does: Google makes money from advertising, not from self-driving cars.
  - pepemon 6y ago
    Are you sure that there's the direct analogy between pricing and salary models like that?
  - shard 6y ago
    I believe a better analogy would be that the 11th company comes and is willing to pay higher costs while still selling at the same price. That company gets the best ingredients at that cost, the suppliers prefer to sell to that company, and denies it to the first 10 companies. The 11th company might even raise prices since their product is better. I don't think predatory pricing would apply in this situation.
echelon 6y ago
If Google is stopping forward progress to entrench their moat, they need to be broken up by the DOJ. There's plenty of antitrust fodder already with their stranglehold over the web and the behavior they've taken to protect their search/ad business. But if they're hiring people away in cutting edge areas of research simply to destroy startups, that's abhorrent. That means they're pouring their obscene wealth from advertising into unrelated fields in order to dominate them. Monopoly.
- sumtechguy 6y ago
  This is true but long term Google can not sustain that. MS did the same in the 90s. Google is failing to execute on many 'big ideas'. Not because of a shortage of talent. But because of a shortage of follow through and nothing moves the needle anymore. That means any new product that has a shot of being interesting (say 1%) has to produce 1.6 billion pretty quickly. There are very few new businesses that start at that position. MS should have owned the cell market. Not for a lack of trying or talent. But they kept changing positions and tech stacks every few months. They lacked the will to do it. Google is in a similar position now with most of its projects outside of its 'core' ideas. What happens, fairly quickly, is the talent figures out that the company does not really value their ideas. They move out of the company and do something else.
biztos 6y ago
If I hire Brad Pitt to be in my (post-pandemic) summer blockbuster film, part of the value he adds is that he is not simultaneously in your summer blockbuster film, and so people who really want to watch Brad Pitt will choose my film over yours. I don't think what you're describing is anti-competitive behavior, rather it's omni-competitive. Pretty much all the money Google throws at anything is "advertising money" but if they are really trying to make self-driving cars, what's wrong with that? Should my Brad Pitt Summer Blockbuster profits not be able to bankroll my Teletubbies Christmas Special?

FartyMcFarter 6y ago

> If Google is willing to pay 200k above market rate This is not possible according to the usual definition of "market rate". If Google is willing to pay X, that is the market rate.

benrbray 6y ago
I disagree with your definition of "market rate", but let's suppose you're right: Do you not see it as a problem that Google alone decides the cost of entry to an entire market?
- FartyMcFarter 6y ago
  Why do you think that Google alone can afford to hire software engineers? edit - I see how my post was misleading. I should have said X is a "lower bound" for the market rate.
  - benrbray 6y ago
    Do you mean upper bound?
- whatshisface 6y ago
  Google isn't the only well-paying software company. If they were, they wouldn't throw money away by paying so much in the absence of competition. Furthermore, there's nothing stopping you from paying $100,000/hour and beating Google if you wanted to. If your business can't make good enough use of programmers to justify paying more than Google, then maybe their talents would be best allocated where they would be most valuable.
- msla 6y ago
  > Do you not see it as a problem that Google alone decides the cost of entry to an entire market? This puts Google in the position of being a monopsony for the labor of programmers; that is, they're the only or primary buyer of that commodity. Part of antitrust laws is preventing that, so, yes, there is a problem if a monopsony arises, but Google isn't in that position anyway because jobs aren't completely interchangeable the same way programmers aren't completely interchangeable. For example, companies can compete on the basis of not being Google, which attracts some people. Companies can compete on the basis of being based in some other geographic location, or having other things to work on, or having a different mix of salary and benefits. Google offering the highest salary doesn't mean they automatically get everyone. It means they get people who want the highest salary to do what Google's interested in as opposed to wanting to work on some kinds of technology Google isn't pursuing.
mh8h 6y ago
That's assuming that the thing Google is buying is a commodity, and its value is the same to all parties.
Spooky23 6y ago
The law defines practices that, while they happen in a marketplace, are anti-competitive and thus problematic. It is not anti-competitive to own the gas station next to the airport and charge a premium for gas. It is anti-competitive to buy out surrounding gas stations and close them to extract higher prices, or to conspire with competing stations to coordinate pricing. Single-firm anticompetitive behavior, as defined by FTC: (https://www.ftc.gov/enforcement/anticompetitive-practices https://www.ftc.gov/enforcement/anticompetitive-practices) Single Firm Conduct: "It is unlawful for a company to monopolize or attempt to monopolize trade, meaning a firm with market power cannot act to maintain or acquire a dominant position by excluding competitors or preventing new entry. It is important to note that it is not illegal for a company to have a monopoly, to charge “high prices,” or to try to achieve a monopoly position by aggressive methods. A company violates the law only if it tries to maintain or acquire a monopoly through unreasonable methods." Horizontal Conduct: "It is illegal for businesses to act together in ways that can limit competition, lead to higher prices, or hinder other businesses from entering the market. The FTC challenges unreasonable horizontal restraints of trade. Such agreements may be considered unreasonable when competitors interact to such a degree that they are no longer acting independently, or when collaborating gives competitors the ability to wield market power together. Certain acts are considered so harmful to competition that they are almost always illegal. These include arrangements to fix prices, divide markets, or rig bids."
- cptskippy 6y ago
  That's in relation to creating artificial scarcity of a product or controlling supply. Staff aren't a product or commodity.
  - Spooky23 6y ago
    Labor certainly is a commodity. I have a relative who bought a very nice beach house from his legal fees suing a hospital network for doing something similar.

whatshisface 6y ago

If Google is willing to pay $200k over your current employer for you, your employer is paying you $200k under your market rate.

mhaberl 6y ago
You can view this issue from another standpoint. Imagine some market where 10 companies sell bread and it costs $5. And lets assume that the costs are $4 and $1 is profit. Then comes a company that makes its money on selling water and it is doing very well. It comes to a bread market and starts selling bread for $3. The competition is quickly destroyed and the bread prices rise. Edit: as a sibling comment mentioned: https://en.wikipedia.org/wiki/Predatory_pricing https://en.wikipedia.org/wiki/Predatory_pricing
- whatshisface 6y ago
  Google buys labor using the proceeds from the stuff they assign the labor to do. Their money does not come from a second market unrelated to programmers. Even if you flipped buyers and sellers your analogy would be inapplicable.
  - a1369209993 6y ago
    > Their money does not come from a second market unrelated to [those] programmers. Yes it does: Google makes money from advertising, not from self-driving cars.
- pepemon 6y ago
  Are you sure that there's the direct analogy between pricing and salary models like that?
- shard 6y ago
  I believe a better analogy would be that the 11th company comes and is willing to pay higher costs while still selling at the same price. That company gets the best ingredients at that cost, the suppliers prefer to sell to that company, and denies it to the first 10 companies. The 11th company might even raise prices since their product is better. I don't think predatory pricing would apply in this situation.

echelon 6y ago

If Google is stopping forward progress to entrench their moat, they need to be broken up by the DOJ. There's plenty of antitrust fodder already with their stranglehold over the web and the behavior they've taken to protect their search/ad business. But if they're hiring people away in cutting edge areas of research simply to destroy startups, that's abhorrent. That means they're pouring their obscene wealth from advertising into unrelated fields in order to dominate them. Monopoly.

sumtechguy 6y ago
This is true but long term Google can not sustain that. MS did the same in the 90s. Google is failing to execute on many 'big ideas'. Not because of a shortage of talent. But because of a shortage of follow through and nothing moves the needle anymore. That means any new product that has a shot of being interesting (say 1%) has to produce 1.6 billion pretty quickly. There are very few new businesses that start at that position. MS should have owned the cell market. Not for a lack of trying or talent. But they kept changing positions and tech stacks every few months. They lacked the will to do it. Google is in a similar position now with most of its projects outside of its 'core' ideas. What happens, fairly quickly, is the talent figures out that the company does not really value their ideas. They move out of the company and do something else.

biztos 6y ago

If I hire Brad Pitt to be in my (post-pandemic) summer blockbuster film, part of the value he adds is that he is not simultaneously in your summer blockbuster film, and so people who really want to watch Brad Pitt will choose my film over yours. I don't think what you're describing is anti-competitive behavior, rather it's omni-competitive. Pretty much all the money Google throws at anything is "advertising money" but if they are really trying to make self-driving cars, what's wrong with that? Should my Brad Pitt Summer Blockbuster profits not be able to bankroll my Teletubbies Christmas Special?